EU Expects Political Agreement on Japan Trade Accord This Week

The European Union and Japan are close to reaching political approval on a free-trade accord, which would unite two regions that make up more than a quarter of the world’s economic output.

“We hope to announce on Thursday that we have a political agreement,” EU Trade Commissioner Cecilia Malmstrom told reporters in Madrid on Monday. “The basic agreement is there.”

Prime Minister Shinzo Abe is seeking to establish Japan as a leader in global trade after U.S. President Donald Trump pulled out of a pan-Asian commerce agreement in January, underscoring his “America First” policy. Abe, European Commission President Jean-Claude Juncker and EU President Donald Tusk are expected to announce the accord in Brussels, according to Malmstrom, before a meeting of the Group of 20 begins in Hamburg on July 7.

Japan is seeking to get rid of levies on exports of auto parts and cars, while the European side is pushing for tariff-free access for its farm products. Abe has met opposition from the agriculture lobby among lawmakers in his ruling Liberal Democratic Party who are emboldened by a plunge in popular support for the prime minister.

“What we expect to indicate on Thursday is that we have a political agreement,” Malmstrom said. “That means access to the market, tariffs, services, public sector purchases.”

Japanese Foreign Minister Fumio Kishida will visit Brussels this week in an effort to reach a broad agreement on the deal, according to a report in the newspaper Nikkei, which didn’t cite anyone.

“There will be some pending issues, in particular the chapter on investments.” Malmstrom said. “The EU has a new model with a tribunal for investment matters, and in that chapter we are still not in agreement with the Japanese.”